In a statement, the Japanese car company said that "the measures we have announced give us a greater opportunity to maintain employment through this difficult period".

Unions said they supported Toyota's plan.

"Any decision to cut wages and working time is never taken lightly but the agreement we have reached with Toyota will ensure none of our members' benefits are eroded and that these skilled workers will remain in place and at work ready for when the upturn comes," said Peter Tsouvallaris, a Unite representative at Toyota.

The company has already held two "non-production" weeks as a way of cutting output.

Motor industry representatives are meeting government officials this morning to discuss the mechanics of how companies can access a £2.3bn support package, made up of £1.3bn in loans from the European Investment Bank and £1bn in loan guarantees. The money is to be used to support low-carbon initiatives.

Some companies have made or are expected to make individual appeals to the business secretary Lord Mandelson for assistance and the government is also coming under pressure to provide a "scrappage" scheme that would provide financial support for consumers buying a new car and scrapping a higher-emission vehicle.

A number of European countries have already introduced scrappage schemes, which are seen as providing short-term help in the face of the downturn in demand.

With unsold cars piling up around the world, the global economic downturn has forced all major carmakers to find ways of cutting costs and reducing production. Nissan is cutting 1,200 jobs at its plant in Sunderland, Honda is suspending production at its Swindon factory for several weeks and BMW has cut 850 positions at its Mini factory in Oxford.